After encountering a wave of protests in response to a decree from Egypt's President Mohamed Morsi that would have raised his edicts above judicial review, Morsi moved quickly to contain the damage. NBC's Ayman Mohyeldin reports.

By Jim Maceda, NBC News

CAIRO — Egyptian President Mohammed Morsi and top Egyptian judges on Monday moved to defuse a crisis in the country, with both sides backing down from a battle over Morsi’s sweeping self-appointed powers.

Coming out of emergency meetings in Cairo, Morsi issued a statement in which he agreed that only his decisions related to "sovereign" matters would be protected from judicial review, his spokesman said, indicating he had accepted a compromise proposed by the judiciary members.

On Thursday Morsi alarmed Egyptians and international observers when he decreed sweeping powers for himself that effectively would automatically make all of his rulings lawful and immune to judicial review.

The seeming power grab prompted tens of thousands of Egyptians to take to the streets to protest, some clashing with police, for the past four nights.

Morsi’s four-point statement issued Monday says that only "sovereign decisions" — for instance, those related to declaring war and dealing with existential threats — would fall under the decree. Even those powers would only apply until there is a new constitution and fresh parliamentary elections, expected in two months.

The statement went on to express respect for the "immunity and independence" of the judiciary. It also qualified his earlier call for a retrial of former regime officials — including dictator Hosni Mubarak, who was ousted in February 2011 after three decades in power. Such retrials would occur only if new evidence emerged, the statement said.

Morsi was propelled to power by the Muslim Brotherhood, an Islamist group that had long struggled against the Mubarak regime.

The judges did not release their own statement but the presidential spokesman said that they had approved the compromise.

Shortly after a presidential spokesman read the statement on Egyptian TV, the Muslim Brotherhood — the parent organization of Morsi’s Freedom & Justice Party — issued its own statement, calling off its planned 'millionya' — or 'million man march' — "until further notice." Their rally, in support of Morsi, had been slated for Tuesday.

Mohamed Beltagui, a top Muslim Botherhood official, who appeared on the broadcast, explained that the organization was making the change to avoid any potential violence, and in hopes of opening up a 'channel of dialogue' with Morsi’s opponents.

Egyptian Presidency via EPA

President Mohammed Morsi, center, meeting with top Egyptian judges in Cairo on Monday in an effort to defuse a crisis over Morsi's self-proclaimed powers, announced on Thursday.

Both the Muslim Brotherhood and Morsi's opposition had called for mass demonstrations on Tuesday, raising fears that heightened emotions could lead to clashes in the streets.

Despite these developments, opposition leaders said they would continue their protest until Morsi completely rescinded his 'dictatorial' decree.

Meanwhile, the several hundred protesters camped in Cairo’s Tahrir Square — the site of the 2011 uprising — say they intend to continue their 'sit-in.'

Some declared that Morsi is irrelevant.

"It’s over," said one protester who runs a medical clinic for injured protesters off the square. "The second revolution has already begun."